Bringing Down the House: The Inside Story of Six MIT
Students Who Took Vegas for Millions
by Ben Mezrich
The Free Press, 2002, 257 pgs
Review score: **** out of *****

Gambling has a bad moral reputation. Losing hundreds of thousands or
perhaps millions of dollars in the vice dens of Las Vegas can blacken
the reputation of even the most upstanding Republican like William
J. Bennett (the professional moralist and author of "inspirational"
tomes like The Book of Virtues).

Gambling not only fascinates Republican prigs but has also casts a spell
over mathematicians for hundreds of years. The development of early
statistics and probablity theory came from gambling. Great
mathematicians like Claude E. Shannon, the father of information
theory, were intrigued by roulette, poker and blackjack. Herbert
Yardley, one of the fathers of American cryptography was an avid poker
player and the author of the book The Eduction of a Poker
Player (Simon and Schuster, 1957).

One of the most famous mathematicians who developed a lifelong
fascination with blackjack and the mathematics of risk is Ed Thorp.
In 1961 Thorp was a newly minted Phd hired as a lecturer at MIT. He
wrote a paper titled Fortune's Formula which he presented at
the American Mathematical Association yearly meeting. This paper
described some of Thorp's early blackjack models, which he ran on an
IBM 704. The following year Thorp wrote Beat the Dealer
(Random House, 1962, revised edition 1966) which lays out the
foundation for blackjack card counting stratagies. This book has been
a best selling classic and is still in print.

Over thirty years later, blackjack and card counting live on at MIT.
Bringing Down the House is a fascinating story of the rise and
fall of a group of MIT students who are part of a blackjack group that
won millions of dollars over a period of about four years. The main
character in the book is "Kevin Lewis" (all names in the book have
been changed). In 1994 Lewis' was an MIT pre-med when he moved in
with two roommates who were MIT dropouts. His roommates did not seem
to have jobs, but appeared to have lots of money. At one point Lewis
worried that they were involved in the drug trade. Eventually Lewis'
roommates take him to Las Vegas and give him a taste of the Las Vegas
high roller lifestyle. They later recruit Lewis for their blackjack
group and introduce him to the leader of teh group "Micky Rosa".
Rosa, who is a decade or so older, was MIT instructor who gave up the
academia for the life of a professional blackjack player. Rosa is a
brilliant mathematician and card counter, whose professional card
counting life lasted until he was banned from the casinos. Although
Rosa can no longer enter the casinos himself, he and a set of unnamed
investors provide the stake for the blackjack team, which Rosa
organizes and coaches.

Once a casino has identified a person as a card counter, the person's
name and likeness are immediately circulated on something called the
Griffin list, which, I am told, has the power to keep people out of
casinos for the rest of their lives.
[...]

For if a card counter should slip up and reveal that he is being
paid to make bets with a bankroll of his own and other people's
money, his card-counting career will come to an abrupt end.

This is what happened to Semyon Dukach: He became so good at counting
cards and won so much money that the casinos eventually caught on to
his technique. Once Dukach's likeness was circulated on the notorious
Griffin list -- a report compiled by Las Vegas detective agency Griffin
Investigations Inc. -- he had no choice but to hang up his aces
and look for a new game. The Venture Cafe by Teresa Esser

The MIT blackjack groups won millions of dollars over the time period
covered in Bringing Down the House. It should be no surprise
that the casinos wish to avoid these kind of losses. In Bringing
Down the House the nemesis of the MIT blackjack groups is called
Plymouth, which is almost certainly Griffin Investigations. Once
Griffin started successfully identifying card counting teams, casinos
were more or less universally forced to subsribe to Griffin's service.
I suspect that virtually every casino in the world subscribes to the
"Griffin List". Any casino that does not become a Griffin customer
runs the risk of losing to card counters who get kicked out of casinos
that do subscribe to Griffin. Like the government intelligence
community, Griffin is a very secretive organization. As a private
company they do not report their profits, but I would guess that they
are very profitable. Apparently this has allowed Griffin to invest in
advanced surveillance technology. Griffin has also invested the
development of a face recognition system they call Indix.

Steven Levy, the technology writer for Newsweek, wrote a similar
article on SRD (see Geek
War on Terror, Newsweek, March 22, 2004). In an example of sloppy
journalism, Steven Levy parrots into the Casino view that anyone who
might diminish casino profits, even through legal means like card
counting, must be a bad guy:

Since Jonas's livelihood is fingering bad
guys -- the Las Vegas firm he founded, Systems Research and Development
(SRD), helps casinos shut their doors to mobsters and card counters

Ben Mezrich is a novelist, not a journalist and it shows in
Bringing Down the House. Griffin (a.k.a. Plymouth) plays the
dark heavy in the book. It is not clear that Ben Mezrich ever found
out much about Griffin Investigations beyond the fact that they are
the bete noir of card counters. A Google search would have shown that
Griffin Investigations is an interesting company. The "chief
investigator" of Griffin Investigations is Beverly Griffin, who
apparently founded the company with her husband Bob.

The story behind Griffin would probably be an interesting one. A
journalist would have wondered how the company started and grew to
become a provider of high tech. surveillance technology to most of the
gambling business. To a novelist a side story about Griffin, a
small company built through the hard work of a husband and wife, could
have ruined the character of "Plymouth", the dark nemesis that
eventually forced Kevin Lewis and the MIT blackjack teams out of the
casinos. Largely because of the fascinating story, Bringing Down
the House is a good book. But this lack of depth is what keeps it
from being great.

Once on a film set, Paul Newman asked him [Ed Thorp] how much he could
make at blackjack. Ed told him $300,000 a year. "Why aren't you out
there doing it?" Ed's response was that he could make a lot more
doing something else, with the same effort, and with much nicer
working conditions and a much higher class of people. Truer words
were never spoken. Ed Thorp took his knowledge of proabillity, his
scientific rigor and his money management skills to the biggest casino
of them all, the stock market.
In for the Count by Dan Tudball, Wilmott Magazine

The personality traits that make a person feel comfortable taking a
risk on a high-tech start-up are similar to those that make one
comfortable with other forms of gambling, including blackjack.
The Venture Cafe by Teresa Esser

For those with a taste for risk, there is no casino like the modern
finanical markets where the opportunity for profit and loss is far
greater than the gaming tables of Las Vegas. The rewards that are
available at investment banks and hedge funds attract some of the
smartest people in the world. This was eventually the path followed by
Ed Thorp.

While a professor at U.C. Irvine Ed Thorp became interested in the
stock market. In 1967 he published Beat the Market: A Scientific
Stock Market System which describes stratagies for trading stock
warrants. Warrants act like stock options, but with a longer term.
Thorp developed an early version of what has become known as the
Black-Scholes option pricing formula. In 1969 Thorp left academia,
never to return. He founded an investment fund, based in Long Beach,
California, initially called Convertible Hedge Associates, and
later renamed Princeton Newport Partners. Princeton Newport Partners
was one of the most consistently successful hedge funds in history,
making Thorp a very wealthy man.

The members of the MIT blackjack teams were young and much of their
story remains ahead of them. I can only wonder how many of them will
find their way to Wall Street or start-up companies.

The story in Bringing Down the House is so compelling that the
book is a page turner, despite Ben Mezrich's writing. Before writing
Bringing Down the House he wrote fiction and this is his first
non-fiction book. Perhaps the awkward and stilted writing style in
Bringing Down the House is due to Mezrich's lack of experience
as a journalist.

Afterward

Before reading Bringing Down the House I read the articles A
Casino Odyssey and A Reader of the Pack, linked to below.
Both of these articles describe card counting as profitable. However,
the card counters in these accounts hardly lived the "high roller"
lifestyle described in Bringing Down the House. Their profit
margins were thin and they stayed in cheap hotel rooms. The end
result in both cases was burnout.

I don't know much about the world of gambling. I don't gamble and
I've only been to Las Vegas to attend the Comdex trade show. So I
thought that perhaps the MIT blackjack teams were simply better
trained, smarter and better funded, which accounted for the large
profits described in Bringing Down the House.

Another possibility is that the account in Bringing Down the
House is exaggerated. As I've noted, Ben Mezrich is more a
B-grade thriller writer than a journalist. While card counting is not
illegal, it is a covert activity. As William Bennett found out,
spending your time in gambling dens is not considered a respectable
pastime, like golf. People are reluctant to talk about their
experiences making the account difficult to verify. So it is possible
that Ben Mezrich or the people who told him the story related in
Bringing Down the House exaggerated. There are many "true
stories" which don't seem entirely
true on closer examination.

This review of Bringing Down the House attracted some
fascinating e-mail which suggests that reality may be closer to the
articles I've linked to below than the account in Bringing Down the
House. The author is anonymous at their request. I certainly
understand and respect the authors wish to be anonymous. I will note
that as a card counter the author is part of a group that includes Claude
Shannon and Ed Thorp, which is pretty good company. My correspondent
writes:

[I have made a few minor edits. BP stands for "Big Player" -- Ian]

Back in the 1970's I wrote the first computer program that could
simultaneously evaluate various blackjack card counting systems, casino rule
variations, and casino "environment" variations (e.g., how deeply a dealer
dealt into a deck/shoe) on-the-fly. In 1979 and 1980 I played on two
successful card counting teams -- one in Las Vegas and one in Atlantic City.

Almost all of the techniques used by the MIT students have been around for
20+ years. It looks like they may have done a little refinement on clumping
but the ability to find a dealer whose clumping is trackable is quite
difficult. Exploiting that clumping is even more difficult. I will pretend
that they found a way to make it highly profitable. Still, the story does
not come close to adding up.

Since the early 1980's, the spotter-BP strategy and the gorilla BP strategy
have been unusable for any significant-sized bets ($25 or greater) for any
significant lengths or time in a casino (say, more than an hour playing at
$25+ bets) without detection.

Even the most loosely run casino pays reasonable attention to bets of $25 or
more (if they didn't they would be out of business). The idea that a high
roller can come in and out of games, make big bets (when the real count
happens to be highly positive), and avoid detection for more than a couple
of days is laughable.
[...]

As for me, after my card counting days were over, I went on to have a
successful career in the computer industry. The quote you included from
Thorp sums it up well -- easier and more pleasant to make money in other
lines of work -- though I would have said that $100,000/year is about the
most a good spotter-BP team could make at blackjack in any year after the
early 1980's.

In a follow-on e-mail my correspondent writes:

The MIT blackjack team(s) certainly existed and, from what I know, exist
today. There are probably somewhere on the order of 15-20 card counting
teams that still ply their trade in any meaningful way however they have had
to evolve their tactics significantly since the early 1980's.

Many of today's teams are built for on-and-off action. They go to Vegas
for a week then go away for a couple of months. They might try to play a
bit in Tahoe or Atlantic City but they generally work Vegas because of the
sheer number of casinos available within a short radius.

One of the tactics we used over twenty years ago was shift tracking. In
short, this is the manner by which you make sure that the same combination
of spotter and BP never play at the same table in the same casino on the
same dealer shift in any eight week period. If you have 50 casinos and 3
shifts in a 24 hour day, you have 150 playing opportunities per spotter. A
tight team of 2 spotters and 1 BP can take advantage of 300 opportunities
per trip to Vegas (again, assuming a trip about once every eight weeks or
so).

A departure from the book is the idea of the BP being in disguise
before the casino is on to you. As told in Bringing Down the
House, they didn't think of this angle until they were Griffin poster
children. In any case, the BP should change his/her style of dress,
maybe wear a beard, have a mullett, etc. on some trips just in case
any dealer or pit boss recalls seeing a BP/spotter combination in the
past.

Contrary to Bringing Down the House, it almost never makes
sense for the BP to be flashy. You simply don't want to be
remembered, period. For example, I had a rule where I was never the
largest wagerer at any table I played at. No exceptions, regardless
of how positive the count was. This led to some lost opportunities
but also resulted in none of us ever getting barred (though I came
very close on at least one occasion).

Bringing Down The House romances the life of a card counter but
there is nothing further from the truth. It is a dreary existence in
which you voluntarily turn yourself into a calculating robot. There
were many days and nights where I could not wait for my shift to end.
Dreaming all night that you are counting cards and waking up with the
count (from you dream) in your head equals the most unrestful sleep
you can imagine. For this (and quite a few other reason) I've always
felt that the only card counting stories that would ever have mass
appeal would need to be highly fictionalized and exaggerated.

Finally, there is the issue of the supposed winnings of the MIT
team. I will leave you with this thought: kids from MIT are obviously
very smart but 2-3% of the population can learn to be excellent
spotters. Being a great BP is probably something 1 in 500 people
could do. So, the barrier to forming a card counting team and having
some money behind it is not ridiculously high. Without casino
countermeasures, thousands of teams would exist. There was nothing
particularly special about the MIT guys though they had better funding
than most teams.

Beyond the fact that hundreds of teams could be formed with the skill level
necessary to win, the reason they do not win millions (nor do the other
hundreds of teams who attempt each year) is that casinos can isolate high
stakes games very, very easily. In all of Las Vegas, there might be 100
tables at any given time where someone is betting more than $100/hand (let
alone $1000/hand, playing multiple hands at high stakes and other attention
getting moves). The casinos watch these tables like a hawk. You can team
play, and you can count, and you can take a little bit per casino here and
there but, no matter how smart you are, your ability to play for those
stakes, many times, jumping in during a shoe, when the count is highly
positive... it's just plain silly to think you won't quickly be detected.
You will.

This article is by a cracker (someone who gains unauthorized access to
computer or telecommunications systems, not someone from the South).
It covers the history of blackjack, the history of card counting and
basic blackjack strategy in a two part article.

Seen
City: From surveillance cams to facial scans, in Las Vegas the
whole world is watching, by J.C. Hertz, Wired Magazine, December 2001

Hacking
Las Vegas: the inside story of the mit blackjack team's conquest
of the casinos by Ben Mezrich, Wired Magazine, Sept. 2002

This article is based on Bringing Down the House.

A Casino Odyssey, by Roger Williams

As anyone with any amount of experience with the Internet knows, the
Internet is the great engine of serendipity. I was searching for
reviews of a book titled The Newtonian Casino to see if it was
simply another printing of a book I already have, The Eudaemonic
Pie, by Thomas Bass. It was largely as a result of reading The
Eudaemonic Pie and Thomas Bass' later book, The Predictors that I
ended up working at The Prediction Company, in Santa Fe, New Mexico.
On these books, lets just say that truth may be an undecidable
proposition.

I found out that The Newtonian Casino is, in fact, a reprint of
The Eudaemonic Pie with an added afterward. I also found a
amazing four part set of articles written by Roger Williams titled A Casino
Odyssey, published on a site named Kuro5hin.

One of the most interesting parts of A Casino Odyssey is the
discussion of the emotional way that even someone trained in graduate
level physics and statistics approaches risk and gambling.

Casinos "work" (in the sense that they are effective tools for
separating customers from their money) by exploiting two universal
human misperceptions. The first of these is a tendency to perceive
patterns in randomness. The cruel losing streak with which I began my
gambling career was no deliberate taunt by god or evidence of crooked
games; it was a perfectly ordinary run of random numbers. As Knuth
wrote with regard to random number generators, if your RNG can't pump
out a string of 20 zeroes then it really isn't random. That is a
perfectly valid result which must happen just as often as any other
arbitrary string of 20 results. But when it happens, we don't think
"hmmm, that is a perfectly valid if unusual result." We think the game
is fixed or biased, and if we're gambling we might smirk and place a
bet.

Another interesting point the Williams makes is that casinos don't like
winners. They cut into profits. A casino is a private establishment
and they can kick you out when ever they want. And they want to kick
you out when you win too much:

As 1997 rolled over into 1998 he parlayed his modest stake into
$80,000. But in that course he was kicked out of every casino on the
Gulf Coast. His big bets were now in the $100 black chip range, and
everybody knew he was a counter from his losing days. Once he began to
win, he was shown the door, although usually with more politeness than
[censored] had shown.

"Ah, Mr. X. We must contratulate you on your really excellent
play. Yes, we have noticed that you are very, very good. In fact,
you're really too good for us. You're welcome to play any of our other
games, but we really can't offer you a Blackjack game any more."

The problem that the casinos struggle with is that there can be large
swings in probability (luck). Although they have the edge, they can
lose a lot of money on the way to realizing the edge. So they prefer
players that play emotionally and give the house a much larger edge.
Many of the people who run casinos also have an emotional approach to
the gambling odds (a Wall Street Journal article on how casinos
attempt to attract big gamblers, the so called whales, mentioned that
you would not see people at Allstate discussing probability the way
casino bosses do).

Although A Casino Odyssey is a wonderful story, I wondered at
the time how true the account was. From what I've learned, it seems
to be true. A similar story is told by Sandra Newman in A Reader
of the pack

I am fascinated by travel books and articles about places I'll never
go. I get to live vicariously through the account. Accounts about
gambling are the same kind of thing. I don't gamble, at least on
games (we all gamble, but that's a different topic). I don't think
that I have a killer instinct when it comes to games like poker.
Without such a killer instinct, it sounds like I'd be a pretty bad
player.

Stephen Elliott has a gritty history, growing up in state homes and
playing poker. A part of him has that hard edge, that desire to
defeat others at the poker table, to "take them". His account of
on-line gambling is fascinating. His advice at the end of the article
also sounds good: don't go there. I belive that for everyone there is
a "drug" that will destroy them. Sometimes it is cocaine, booze or
heroin. Sometimes it is sex, power, unbounded ego, the desire to escape
death. For some it is gambling. The wise person does not open the
door to the thing that will destroy them.

In the continuing technology war that the casinos wage to make sure
that their marks (ah customers) walk away with as little casino money
as possible, some casinos are using software and hardware from a
company called MindPlay.
According to this article the MindPlay system can track blackjack play
and betting. This allows an automated technique to recognize
blackjack card counters.

The MindPlay system also raises two interesting questions:

In Nevada it is illegal to use computers to track the games in a way
that will lead to better playing performance. This law applies both
to casinos and to their customers.

It is illegal to do anything that alters the odds of a game.

Using a computer to track play and then kicking players out who are
winning seems to violate both of these laws. To avoid this
brush with gaming regulations, the casinos claim that they use the
MindPlay system to track how much money is being gambled so that they
can do a better job of concentrating their "comp" money (free rooms,
meals, shows, women, etc...) Of course if they also find someone who
is, on the balance, walking away with lots of their money, they may
ban them from the casino.

Books

Steven Skiena is a professor of computer science at the State
University of New York at Stony Brook. This book is about building a
predictive computer model for Jai Alai.

Fooled by Randomness by Nassim Taleb

Nassim Taleb is an options trader who currently manages his own hedge
fund. As the title suggests, this book is, in part, about how humans
try to find patterns in randomess. Not everone likes this book.
I found it artfully written, profound in places and touching in others.

Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

As with all of Peter L. Bernstein's work, this book is excellent. It
discusses the development of probability theory, insurance and the
application of mathematics to risk calculation.

Capital Ideas: The Improbable Origins of Modern Wall Street by
Peter L. Bernstein

This book is a popular introduction to the history of modern finance
and, to some degree, economics. As in Against the Gods,
probability and statistics play a staring role.